Parents always want the best for their children, not just when they are living with you in your home but even after they leave your home to fulfill their destinies. It is highly recommended that you have a plan to teach and educate your children on the ways in which the world works. Most naturally, this requires a great amount of proper planning to make sure that they have the right amount of resources to increase their chances of being successful when they start out on their own. Don’t feel sad about the day when your children would leave your home, but consider these simple ways to better prepare for your children’s futures.
Start Planning for College Right Now
A lot of young adults today are starting their lives with a huge load of student loan debt. As a parent, it is not feasible for everyone to afford the total cost of college education, more so given the increasing rates for tuition and boarding in certain countries. With that being said, you will be able to start planning now for your kid’s education with the help of a 529 tax advantaged savings plan. This will offset the a good portion of the money that your children might need when the time comes for their turn to go to college. This helps them to reduce their reliance on those expensive student loans. Thus they can start their financial future without having to worry a lot about student debts right after graduation.
Open a Roth IRA
Teenagers aren’t exactly the kind of demographic who think about retirements at their age. However, it’s never too early to plan. In fact, as soon as your children start to make a few bucks, you can show them and help them out to open a Roth IRA and explain them the value in investing. This could be a great educational as well as bonding opportunity, as you can do this along with them. You will be able to set them up with an account, help them with their regular deposits, and then teach them about how they will be able to monitor its progress.
A Roth IRA is considered advantageous when compared to a traditional IRA, especially at this age due to certain reasons. Since the planning is kind of long term before retirement, and your child is not likely to earn much at the moment to pay taxes, the tax-deferred status of a traditional IRA does not make much logical sense for them. To make use of tax savings, it is a lot more valuable to try out the Roth IRA and let your children enjoy the fruits of the tax-free status decades down the road when they start drawing out. Stats show that over 4 in 10 Americans don’t have any retirement savings, this could be one of the practical ways in which you can help secure your children’s financial future.
Opening a Bank Account
Right after your children make their first dollar, open a savings account for them. Their first dollar need to be earned money at all. It could be from an allowance or cleaning up the neighbor’s lawn. Open a savings account for your kid at the bank. Help them decide how much money they want to save every time they get paid. Consider online banks as well, as a lot of them provide accounts for children with minimal fees. With an online account, your kids can access their account to see their savings grow. Starting a saving habit really early, can help your kids for their rent or their down payments for a house down the line.
As you can see, there are so many different ways in which you can plan for your kid’s stable financial future. The secret is to start early. Do not wait for the right time to come, years will fly by just like that and then you will wake up one day feeling bad for missing out on so many different opportunities. Financial education is the single most valuable gift that you can give your children for their financial freedom down the line.
Try these three simple strategies. If you have any doubts with regards to this, let us know through the comments and we will be glad to help you out. If you have any suggestions regarding how we can improve the article, let us know them through the comments as well for us to improve.